The taxman is targeting people who have sold properties without declaring the profit and who have therefore avoided paying the tax due.
Her Majesties Revenue & Customs (HMRC) has launched ‘The Property Sales’ campaign, targeted at investors who have sold properties for a profit, either in the UK or abroad, but who have not declared the sale and have so far avoided paying the necessary tax.
With the exception of an individual’s main residence, any property sold for a profit is liable to Capital Gains Tax (CGT). However, it appears that some investors are avoiding the tax by not declaring their profits; in a move which will be seen as long overdue by many it now seems as though the taxman is clamping down on the practice.
Under the crackdown, property investors have until the 9th August to own up to any previously undeclared profits and until the 6th September to pay any tax due.
Marian Wilson, of HMRC, said: “Some people will not understand that selling a second home, a holiday home or a property disposed of as a gift could attract Capital Gains Tax. They need to look at our website or contact us.”
She continued: “It is better to come to us before we come to you.”
Tax on buy to let properties
No tax is usually due on the sale of someone’s main residence; however, any profit from the sale of a buy to let property is potentially subject to Capital Gains Tax (CGT), which is charged on any gains above £10,600 if the asset is held individually, or £20,600 if it is owned jointly.
Basic rate tax-payers pay CGT at a rate of 18%, for higher rate tax-payers this increases to 28%.
With buy to let booming, HMRC is clearly concerned that individuals are selling investment properties without declaring the profits and are therefore avoiding paying tax.
In addition to CGT, owners of investment properties are also liable to Income Tax on any rental income, above costs, such as mortgage interest, repairs and insurance.
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